Last Updated on May 25, 2022 by Neera Bhardwaj

Income tax is a tax on all income borne by taxpayers of the country. But, before you get into filing your income tax returns, you need to keep in hand all the financial documents, like investment proofs, Form 26AS, interest income proofs, and salary slips. Here is a guide on Form 16, its components, along with its eligibility and requirements.

What is Form 16?

Form 16 is a certificate of deduction of tax at sources, issued by employers (mandated by Section 203 of the Income Tax Act, 1961) to their employees. The companies use this form to provide details of tax deductions to their employees and include information like the amount of tax deducted, date of submission to the IT department, etc.

According to the income tax slab rates for FY 2021-22, the basic tax exemption limit is Rs. 2.5 lakh. If your income for a financial year exceeds beyond that limit, then your employer must deduct a TDS (Tax Deducted at Source) and deposit the same to the government.

You might have changed your job in a single financial year or have worked with multiple employers simultaneously. If taxes are deducted in all of these places, then you have to collect separate forms from each employer. You will then have to combine the data from the separate forms to file your ITR.

Components of Form 16

Form 16 has two components, designated as parts A and B, respectively.

Part A

This component of Form 16 has every detail of the TDS deduction made. It also includes details like the PAN and TAN of the employer, their name, their address, PAN details of the employee.

Part B

It is an annexure to Part A. This component includes the salary breakup of the employee, various types of deductions, tax computation, and exemptions (if there are any). The allowances and exemptions can be any travel concession, allowances for house rent, death-cum-retirement gratuity, and likewise.

Form 16 requirements

  • Form 16 means that the government has collected the tax amount docked by your employer.
  • It is a verification of your income as a salaried individual of a company.
  • Form 16 will assist you when you need to file returns.
  • If you need to apply for a loan, there are many financial institutions which demand this form.

Eligibility for Form 16

All salaried individuals are eligible for Form 16, whose taxes are deducted at the source by their employer. If your income doesn’t fall in the tax bracket given by the government, then the employer need not submit form 16. However, most organisations these days issue Form 16 as a healthy practise because it provides compact information about its employee’s earnings.

How to download Form 16?

It is the responsibility of your employer to give you Form 16. But if you still do not have it, there are simple steps to download it. You can find the details for Form 16 download in this section.

  • The first step is to visit the official website of the Income Tax Department.
  • You will find a section named ‘Forms/Downloads’. Click on it.
  • Next, find and click on the option named ‘Income Tax Forms’.
  • Next, you will find an option named ‘Form 16’. Within this choice, you will find two other options named ‘Fillable form’ and ‘PDF’.
  • Choose the option which is relevant for you.
  • You can download Form 16 from the next page.

Working process of Form 16

The working process for Form 16 has been given by the Income Tax Department. When your employer files your TDS returns, it gets updated in the database of the IT Department within 15 days. Your employer can then download and send it over to you.

In case you lose your Form 16, there is no need to panic. You can simply ask your employer for another copy. Also, if you notice any discrepancies in your form, bring it to the notice of your employer.

Merits of Form 16

  • You can check how your tax was calculated and check for discrepancies.
  • Form 16 is a vital supporting document for your visa issuance.
  • It acts as your income proof.
  • If you switch jobs, your tax liabilities can be checked by your current employer.
  • One-stop destination for checking your tax-saving investments.

Summing up

One of the vital things that you should do as an earning citizen of the country is file proper ITRs. This makes Form 16 a mandatory document, which contains your crucial financial information in one place. Apart from making your ITR filing easy, this useful document lets you get sanctioned for loans, insurances, visas, and more. So, when you get your copy of Form 16, make sure you preserve it carefully.

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